Updates to the State of Emergency in Myanmar
There have been quite a number of developments regarding the State of Emergency in Myanmar. We set out below these key developments.
New Caretaker Government Formed
A new caretaker government has been formed by the State Administration Council ("SAC") pursuant to Order No. 152/2021 on 1 August 2021, with the declaration of Senior General Min Aung Hlaing as Prime Minister of the caretaker government. The newly formed caretaker government also pledged to hold democratic elections by August 2023.
Amendment of the Counter-Terrorism Law
In the legal sector, the Counter-Terrorism Law has been amended which introduces harsher penalties for partaking in anti-regime activities. The imprisonment term for exhortation, persuasion, propaganda, recruitment of any persons to take part in terrorist activities has been extended from three years to seven years. Furthermore, SAC has declared that publicly supporting the National Union Government (NUG) on social media is deemed to fall under Section 52(a) of the Counter-Terrorism Law, which carries imprisonment penalties ranging from three to seven years.
Dismissal of Ongoing Cases Unless Exempted
Separately, Order No. 172/2021 was issued on 11 August 2021. The order prescribes a dismissal of all ongoing cases unless they fall under one of the exemptions. The exemptions include cases for a relevant offence under a specified law, or when a plaintiff has submitted a complaint for continuance of the case.
We will be monitoring closely the updates to changes pursuant to the State of Emergency in Myanmar due to its rapid development. Please click here for our in-depth update concerning all the developments which has occurred due to the State of Emergency in Myanmar.
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Updates from the Central Bank of Myanmar
The Central Bank of Myanmar ("CBM") has recently issued several directives and notifications to financial institutions.
Change of Financial Year
On 7 September 2021, CBM issued Letter No. MaBaBa/NaPaTa/FIS/134/2021 notifying all financial institutions including mobile financial service providers of the alteration of the financial year for 2022 to 2023 from the usual period of 1 October to 30 September, to 1 April to 31 March. In view of the change of the financial year for 2022 to 2023, CBM has declared a six-month interim financial period starting from 1 October to 31 March.
Revocation of Maximum Rate
In order to control the inflation of foreign currency exchange rate, CBM previously issued Directive No. 11/2021 fixing the CBM Reference Rate as the Mid-Rate, and restricting the market range between +0.8% or -0.8%. However, on 10 September 2021, CBM revoked the maximum rate by a new directive (Directive No. 12/2021).
Exporters to Deposit Income Derived from Exports in Foreign Currency Within Prescribed Time
As a result of the cash shortage and the inflation in currency exchange rate, on 3 September 2021 CBM passed Notification No. 33/2021 reminding exporters of their obligations under Section 38 (b) of the Foreign Exchange Management Law ("FEML"). Among other things, Section 38 of the FEML mandates exporters to deposit their income derived from exports in foreign currency within four months after the receipt of the remittance. CBM further expressed that the conversion of foreign currencies must be carried out at authorised dealers within the prescribed period at the current exchange rate. The notification took effect from 3 September 2021.
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Restrictions to the Importation of Motor-Vehicle
The Ministry of Commerce has announced in a letter dated 27 September 2021 to the State Administration Council (SAC) its intention to restrict the importation of motor-vehicles. The relevant details of its proposed restrictions are as follows:
- The issuance of private (individual) import licenses for motor-vehicles from foreign countries shall be suspended from 27 September 2021;
- The issuance of show room/retail centre import licenses for motor-vehicles from foreign countries shall be suspended from 1 October 2021. Motor-vehicles that are in transit from a foreign country which have departed the origin country of export before 1 October 2021 shall only be allowed to be imported after the inspection of the original Bills of Lading relating to these motor-vehicles;
- New applications for show room/retail centre business licenses and import licenses for purposes of carrying out the business shall not be accepted with effect from 1 October 2021;
- Import licenses for motor-vehicles for purposes of swapping old motor-vehicles as per the old/used motor-vehicle regime implemented by the Road Transport Administration Department shall only be issued to persons holding show room/retail centre licenses; and
- The import policies for motor-vehicles will only be permitted for new motor-vehicles commencing from 1 January 2022.
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E-Filing System to be Used in Commercial and Special Goods Tax Returns
In order to avoid in-person tax filings due to the current COVID-19 pandemic, the Internal Revenue Department ("IRD") under the Ministry of Planning and Finance ("MOPF") made an announcement on 3 September 2021 that the filing of quarterly or annual Commercial tax returns, Special Goods tax returns, Capital gains tax, and Income tax returns should be made through the E-filing Management System ("E-filing system") provided on IRD's official website. Taxpayers utilising the E-Filing system must obtain a Taxpayer Identification Number ("TIN") from the relevant tax offices. The E-Filing system will take effect from 1 December 2021.
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Foreign Employee Restrictions Issued by the Central Bank of Myanmar
The Central Bank of Myanmar ("CBM") issued Letter No. CBM/MP/FIR/Bank Si Sit/1 (4/2021) titled "Instructions to comply for matters related with employing of foreign employees at Banks" ("Instructions") which took effect from 2 August 2021. The relevant details are as follows:
- Banks intending to employ foreigners must seek the approval of CBM at least 30 days before engaging such employees. Applicant banks must provide documentation proving that they have scrutinised the prospective employees in relation to their political involvement, criminal records, and insolvency, and they are satisfied that such prospective employees do not have political involvement, no criminal records and are not insolvent;
- The Letter also sets out the maximum number of foreign employees that can be employed by a bank depending on its size:
|| Market Share
|| Maximyum number of Foreign Employees|
| Large Bank
|| More than 5%
| Medium Bank
|| Between 1-5%
| Small Bank
|| Less than 1%
- Banks which are currently employing more than the maximum number of foreign employees must, within 30 days from the issuance of the Instructions, submit proposed measures to make them compliant with the prescribed maximum cap;
- Foreign banks are not allowed to employ a foreigner as their Chairman or Deputy Chairman. Where a Chief Executive Officer is a foreigner, the Deputy Chief Executive Officer must be a Myanmar citizen;
- Banks with foreigners on their Boards of Directors are required to obtain approval from CBM for these foreigners' continued participation;
- Foreigners may be Heads of Departments so long as they do not comprise more than 50% of the Heads of Departments. Furthermore, where a foreigner is a Head of a Department, the Deputy Head of the Department must be a Myanmar citizen.
Foreigners employed to be Heads of Departments must serve a probation term of one year, and be duly employed for three years thereafter. This may be extended for an additional period of two more years, after seeking approval with the CBM.
Banks are obligated to have in place a professional training plan for Myanmar citizens with the view that the Myanmar citizens will be able to undertake the roles of the foreign employees;
Banks are obligated to report to CBM their foreign employees' travel history outside of Myanmar. The duration of travel that a foreign employee may have should not exceed three months, in lieu of special permission from CBM;
Non-compliance with the aforementioned instructions may result in a breach of Section 154 of the Financial Institutions Law. A breach of Section 154 of the Financial Institutions Law may result in (i) a warning, (ii) payment of fines, (iii) issuance of orders including those restricting the operations of financial institutions, or (iv) temporary suspension or termination from duties in financial institutions.
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Reformation of the Digital Economic Development Committee
The Digital Economic Development Committee ("DEDC"), instituted by the previous Union Government under the National League of Democracy administration, was restructured by the State Administration Council ("SAC") under Notification No. 205/2021 dated 7 July 2021. The SAC replaced the former Vice-President with the Vice-Chairman of SAC as an advisor. The Minister of Planning and Finance remains the chairman of DEDC.
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Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.